India defence research agency releases 2020 procurement manual

Photo: DRDO Chairman Dr G. Satheesh Reddy (left) explaining the Procurement Manual 2020 provisions to Defence Minister Rajnath Singh on Oct. 20.

New Delhi: India has released its defence research agency’s procurement manual for 2020 that is aimed at increasing the scope of participation of local industry in military products development.

Though the release ceremony was held on Oct. 20 with Minister of Defence Rajnath Singh formally announcing the launch of the latest version of the Defence Research and Development Organisation‘s (DRDO’s) Procurement Manual 2020 (PM-2020), the document itself was released to the public only today.

The latest procurement manual is expected to encourage more participation of the Indian industry, including Startups and Micro, Small and Medium Enterprises (MSMEs) in Defence Research and Development (R&D) for achieving ‘Atmanirbhar Bharat‘, according to a Oct. 20 statement from the Ministry of Defence.

“The new DRDO Procurement Manual will facilitate the indigenous defence Industry by simplifying the processes and ensure their participation in design and development activities. The PM-2020 will help towards realising Prime Minister Narendra Modi’s dream of ‘Atmanirbhar Bharat‘,” Rajnath Singh was quoted as saying that day.

He appreciated the contribution of all the officials of DRDO and Finance Wing in the Ministry of Defence for their contribution in bringing out the revised PM-2020.

The PM-2020 will facilitate faster execution of R&D projects and programmes, while the modified features of the manual will go a long way to facilitate participation of industry in various R&D projects, the statement said.


Some of the new features of the PM-2020 are:

  • Bid security declaration option for earnest money deposit, increase of threshold limit for advance payment, placement of order on lowest bidder 2 (L2) in case L1 backs out are some of the salient features of the new manual, which will assist the industry for the speedy execution of projects.
  • Some more enabling measures of PM-2020 are exemption of bid security and performance security up to Rs 10,00,000 (Rs One Million/$13,544), no negotiations for commercial off-the-shelf (COTS) items/services wherever price discovery is happening through market forces.
  • Performance security for service contracts is linked to the payment cycle instead of total contract value. Procurement of stores from development partners, safeguarding of free issue material through insurance cover instead of bank guarantee (BG) are other facilitating measures adopted to help the industry.
  • In the new PM-2020, the liquidated damage (LD) rate for development contracts has been reduced. The delivery period (DP) extension process has been simplified for faster decision making. Many of the internal procedures have been further simplified for faster engagement with industry. It may be noted that the previous Procurement Manual of DRDO was last modified in 2016.

DRDO Chairman and Department of Defence Research and Development Secretary Dr G. Satheesh Reddy and Secretary (Defence Finance) Gargi Kaul witnessed the PM-2020.

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